U.S. Department of Justice Repatriates Millions in Kleptocrat-Stolen Assets to Kyrgyz Republic

On February 26, the U.S. Department of Justice announced that it would be repatriating a total of $6 million to the Kyrgyz Republic related to the corruption and theft of government funds by the family of former Kyrgyz President Kurmanbek Bakiyev, including Bakiyev’s son Maxim Bakiyev. To mark the successful cooperation of both countries in the repatriation, senior Kyrgyz Finance Ministry and U.S. Department of State officials participated in a joint public event.

The repatriation stemmed from a $6 million forfeiture order entered in a successful money-laundering prosecution in the U.S. District Court for the Eastern District of New York. In October 2018, the Department of Justice granted a Petition for Remission that the Kyrgyz government had filed with the Department’s Money Laundering and Asset Recovery Section (MLARS). The Kyrgyz government asserted that that the funds subject to the forfeiture order “traced back to monies stolen by Maxim Bakiyev from Kyrgyz state authorities and other banking institutions.” Prosecutors in MLARS’s Kleptocracy Asset Recovery Initiative assisted in the investigation that connected these funds to the corruption offenses in Kyrgyzstan.

As of February 26, the Department of Justice stated, approximately $4.5 million of the funds had been collected and would be available for repatriation to the account of the Kyrgyz government. It also said that both the U.S. and Kyrgyz governments would make additional efforts “to try to locate and return the remainder of the stolen assets in the forfeiture order.”

The Department of Justice also reported that the repatriated assets would “be used for the benefit of the Kyrgyz people, with a focus on social projects and anti-corruption and transparency.” Those projects reportedly include:

Healthcare: “Improving public access of the rural population to the healthcare system by buying and installing medical equipment (X-ray, diagnostics equipment, etc.) for regional hospitals to deliver better medical services to the rural area population”;

Water: “Construction of water supply facilities in order to expand access to clean drinking water for the rural population through upgrades of drinking water systems and expansion of the scope of ongoing construction of large-scale water supply facilities (water pipes, water pumps, water purification facilities) currently under way with financial support of the World Bank and other International Financial Institutions;” and

Anti-Corruption: “Strengthening Kyrgyz institutions responsible for anti-corruption programs and promoting the transparency of court proceedings and financial integrity of state organs, including the purchase and installation of audio and video equipment for projects in district courthouses to increase transparency and public control in the justice sector.”

Note: This case marks another significant (if comparatively small) success in international cooperation to locate and repatriate assets stolen by kleptocratic regimes. In contrast to some other countries with high bribery and corruption risks, such as Equatorial Guinea, where the prospects of repatriated funds being used for the benefit of the general population are vanishingly small, the Kyrgyz Republic, despite its low ranking in the current Corruption Perceptions Index (132nd out of 180 countries), appears to represent a genuine opportunity for repatriated funds to meet everyday needs of Kyrgyz residents.

The Justice Department announcement does not specify how the use of the repatriated funds to support the announced projects will be monitored and audited. Organizations and experts focused on anti-corruption and kleptocracy issues should therefore make a sustained effort to track and report publicly on what happens with these funds, and how successfully these funds have been used to support the identified projects. More countries are likely to join in efforts to find and repatriate kleptocrats’ assets if they have confidence that recipient countries’ mechanisms for using repatriated funds for public benefit are both transparent and effective.

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Published by Jonathan J. Rusch

I'm a lawyer and consultant interested in corporate- and individual-compliance issues, and an inveterate part-time law professor; a former federal prosecutor, regulator, and anti-bribery and corruption compliance head at a global financial institution; and a (very minor) shareholder in Williams Grand Prix Engineering.
View all posts by Jonathan J. Rusch